Experts who spoke at the Charter Property and Casualty Underwriters Society 60^th annual meeting in Los Angeles earlier this week said they foresee a blending of traditional and non-traditional covers in the future to provide for the unique insurance needs of a wide array of public and private entities.

Traditional carriers serve the alternative market as so-called "fronts" and in some instances, such as when workers' compensation polices are issued, are required to be in place.

While ART mechanisms are thought to thrive best in hard markets, that is not always the case, according to John Shea, president of the Petaluma, Calif.-based Tangram Program Managers. He asserted that a hard market "is the worst time to start one of these."

"The reinsurers will not return your calls and the fronting companies just don't want to deal with you," he said.

Mr. Shea said fronting companies are often desirable for marketing credibility and financial stability they bring.

As a former top official at San Francisco area-based Fireman's Fund dealing with the ART entities, Mr. Shea did not seem all that sanguine about their future.

"The record is not all that great for the regular players. I know that Fireman's Fund got out of it. They thought it just was not worth it," he said, adding, "in the end, the traditional market will learn to adopt and adapt all that is useful."

Tony Kuczinski, president of Princeton, N.J.-based Munich American RiskPartners, said that most group captives and risk retention groups typically seek quota share reinsurance, while ceding 100 percent of the excess and catastrophic layers.

"This better facilitates the financial alignment between the group and the insurers," he said. "Because when they win, we win; and when they lose, we lose."

In addition, the quota share method will supplement capital contributions and provide more favorable ratios, which regulators put a great deal of stock in, he said.